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The university had put out a tender for a private firm to run all of its services, except teaching and the vice-chancellor’s office.

Services included library facilities, IT, estates, payroll and student services, such as counselling and careers advice.

Three firms – BT Global, Capita, and Indian-based consultancy Wipro – were shortlisted to bid for the contract worth £74 million over five years.

But the university said today it had “decided to stop the shared services procurement”.

Instead, it will undertake “an extensive and rapid Business Process Re-engineering exercise focused on our support service areas”, a statement said.

The decision to keep the support services in-house for now follows the university’s loss of its Highly Trusted Sponsor status on 29 August, which prevents it from recruiting students from outside the European Union.

Around 2,600 existing students were affected by the visa revocation, with almost half relocating to other universities.

In its statement, London Met said “our business changed” following the visa ban.

“We no longer feel that the basis on which we opened the competitive dialogue for shared services is now the best match for our new circumstances,” it said.

“We will now move very rapidly to procure the services of a third-party who will work with us to re-engineer our support service processes.

“The re-engineering will necessarily also help to take cost out of our business, so that the financial impact of this year’s lower enrolments is mitigated.”

A report by the journalist David Hencke said the decision by Theresa May, the Home Secretary, to revoke London Met’s visa licence had caused dismay for government colleagues backing the university’s outsourcing project, by ensuring no private company would take on the contract amid such financial uncertainty.

Mr Hencke’s report said that David Willetts, the universities and science minister, and George Osborne, the chancellor, “had staked a lot” on the outsourcing “and it was smashed overnight”.

Malcolm Gillies, vice-chancellor at London Met, said the “business process reengineering” was actually the first part of the overall shared services plan “in a modified form”.

However, the second phase, in which services were handed to a private company or a wholly-owned subsidiary of London Met, would not progress at the moment, he said.

The shared services model was still possible after the Treasury granted a VAT exemption to universities participating in such partnerships, he insisted.

“The hunger for universities [to take part in shared services schemes] is only growing due to the shortfalls in enrollments this year.

“This was never about outsourcing. The whole point was to take advantage of the new VAT changes, but it needs to be done in a more contained first stage.

“The question…is to come up with administrative services offering more value for students and the taxpayer.”

However, Max Watson, chair of London Met’s Unison branch, said his members were “celebrating seeing off the shared services threat”.

However, he added: “Unfortunately, the university appears to have so little confidence in their own managerial competence that once again they are seeking a ‘partner’ to ‘re-engineer’ our support staff processes - yet another costly consultant telling them to cut jobs and services.”